Posted on 11/09/2008 12:07:39 PM PST by Son House
How would your 401(k) perform under a President Obama versus a President McCain? To find out, try the revealing calculator on the website of Americans for Tax Reform. This device considers the value of your investment plan, and then estimates how your money would fare, depending on whether Barack Obama or John McCain wins today’s election.
Take, for instance, a 401(k) with a balance of $121,202 balance — equal to the average 401(k) at close-of-business 2006, according to the Employee Benefits Research Institute. Under Obama, such an account would shrink to $114, 293. But under McCain, it would grow to $177,076.
How about a 401(k) with $66,650 in investment savings — the median value at year-end 2006? It would fall to $62,851 under Obama, but rise with McCain to $97,376.
Lastly, ATR’s Tax Policy Director, Ryan Ellis, reckons that a typical 401(k) receives a monthly deposit of $450. It would wane to $424 under Obama, but wax to $657 with McCain in command.
Why are the assets in these three scenarios predicted to sag 5.7 percent if Obama wins, but soar 46.1 percent if McCain prevails tomorrow night?
The key distinction is public policy. Ideas, after all, have consequences.
Obama and McCain promote vastly different tax proposals which — all else being equal — will have an enormous impact on financial-market performance. Rutledge Capital — which prepared the ATR calculator’s estimates — incorporated both nominees’ tax agendas into its abacus.
Obama hopes to hike capital-gains and dividend taxes by one-third, from 15 percent today to 20. He would maintain the current corporate tax at 35 percent — the world’s second-highest overall business tax, exceeded only by Japan’s 39.5 percent levy. Obama also would keep the IRS’s stultifying depreciation tables, which businesses must use to write off major capital-equipment purchases gradually across multiple years.
McCain envisions a far more business-friendly environment. He would halve the 15-percent capital-gains and dividend taxes to 7.5 percent. The 35-percent corporate tax would tumble to 25 percent — a level comparable to average business taxes across Europe. A 25-percent U.S. corporate tax would be more attractive than analogous levies in France (38.4 percent), Canada (33.5), Germany (30.2), or Great Britain and Mexico (both 28). McCain’s corporate tax cuts should lure foreign capital here, like coins to a vacuum cleaner.
Finally, McCain would retire the mind-numbing depreciation tables and let companies expense their capital purchases in year one. Most enterprises subsequently would buy such items when it made business and economic sense to do so, not primarily to obey complex IRS timetables.
As Citicorp’s late chairman Walter Wriston sagely observed, “Capital goes where it’s welcome and stays where it’s well treated.”
ATR’s 401(k) Calculator confidently predicts what should be intuitive: Americans’ investments, like the general economy, will be battered by Barack Obama’s tempest of new taxes, but blossom in the sunlight of John McCain’s far-lighter tax burden.
401K?!
Under Obama you won’t have a 401K. You will have a gov’t IOU from the infamous SS Trust Fund.
One word: REQUIRED.
Under Obama you won’t have a 401K. You will have a gov’t IOU from the infamous SS Trust Fund.”
I have tried to explain this to a number of people.
Apparently it is too much for them to digest at one sitting—they just cannot believe I am correct. When I refer them to the Free Republic threads about the 401, I get :
It’s just an opinion
It’s a Republican lie
They cannot do this- too many people would be affected.
I am now working on how many ways I can say:
I TOLD YOU SO......
I stopped my 401K contributions on Thursday. I figured I might as well stop throwing money in a bucket that hs no bottom. After Obama is voted out in 4 years I will resume my 401K if it still exists.
Right on! It’s called scrip and it will be worthless.
Largest source of liquid untapped money in the country. Where do they think Hussein is going to get the money to fund his reparations?
The sad thing here is that it’s reported as news. This should have been so blatantly obvious from the very beginning that no one with a policy of soaking the rich could get nominated on either ticket.
I think it goes without saying that we’re headed for some serious economic woes. Jimmy Carter redoux.
I am staying in because long term down market offers more long term growth, obviously a big risk with Democrats, but polls say they are better for the economy(/s), I have always put in the minimum to get the employers matching funds
My 401K went nowhere under the present administration.
401(Keg) Plan
If you had bought $1,000.00 of Nortel stock one year ago, it would now be worth $49.00.
With Enron, you would have $16.50 of the original $1,000.00.
With MCI/Worldcom, you would have less than $5.00 left.
If you had bought $1,000.00 worth of Miller Genuine Draft (the beer, not the stock) one year ago, drunk all the beer then turned in the cans for the 10-cent deposit, you would have $214.00.
Based on the above, 401KegPlan.com current investment advice is to take that $5.00 you have left over drink lots and lots of beer and recycle !
Wow, should me husband have his 401k switched to his IRA? I am not as financially astute as I’d like to be?
Neither am I. I was told that you can’t switch unless you
leave the 401K job. I don’t know what to do about mine
either, but since I’m 59 1/2 I might have a few more
options than younger person. Good luck trying to hang on
to what you’ve saved so far.
Then you invested poorly.
I think you stay in at this point, 3rd quarter 2009 would be the time I look to sell and or change. The reason is 2010 is when the Bush tax cuts sunset, and everyone will be getting out, 3rd quarter of 2009 should offer an upswing, even if artificially induced by one term novelty candidate, long term we need low tax rates for real economic growth
One other explanation is the market had a lot of record highs that would raise the dollar cost averaging of a 401k, therefore making any drawback in the market a drag on the account balance.
.
Another observation I would offer is the high employment under Bush is what gave defaulters the chance to invest in them high risk mortgages they really shouldn’t have afforded themselves
can I safely assume that no 401 tax changes can take place at least until 2010?...should I contribute next year?......
I find it highly ironic that so many high-income voters supported Obama when many of them will be most harmed by his economic policies.
I agree partly, what I noticed though was that I was putting money in (including my employers contribution) and the balance kept dropping by the hundrend. I just started thinking it was counterproductive and stopped the withdrawl from my check. If the economy picks up I can always start it again.
no 401 tax changes can take place
.
Nope, unfortunately, like the $700 billion bail-out, Democrats will push their legislation regardless of public resistance, but I’d think folks will be more outspoken if the 401k is changed
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.